NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Tuesday, May 4th, 2021

DONE! Governor Jay Inslee signs bill to levy a capital gains tax on the wealthy into law

Pro­gres­sive tax reform in Wash­ing­ton State took a long-await­ed and sore­ly need­ed step for­ward this after­noon with the sign­ing of two fis­cal­ly respon­si­ble bills that will strength­en our com­mon wealth: ESSB 5096, which levies a state cap­i­tal gains tax on the wealthy, and ESHB 1297, which updates the statute autho­riz­ing a Work­ing Fam­i­lies Tax Cred­it for Wash­ing­ton’s poor­est families.

“This impor­tant step to rebuild our unfair tax code was tak­en after years of work, years of dia­logue, and thou­sands of voic­es call­ing for this pol­i­cy,” said Sen­a­tor June Robin­son (D‑38th Dis­trict: Everett and Sno­homish Coun­ty), the prime spon­sor of the leg­is­la­tion. “We’ve heard that peo­ple from every part of our state are ready to move toward a health­i­er, stronger future togeth­er, and it’s time for the wealth­i­est among us to pay their fair share for that future.”

“This cap­i­tal gains excise tax, along with the Work­ing Fam­i­lies Tax Rebate that we passed ear­li­er this ses­sion, will help sup­port work­ing fam­i­lies in every cor­ner of our state,” said Rep­re­sen­ta­tive Noel Frame (D‑36th Dis­trict; Seat­tle), NPI board­mem­ber Gael Tar­leton’s suc­ces­sor as Chair of the House Finance Committee.

“By ask­ing the wealth­i­est among us to share in the respon­si­bil­i­ty of fund­ing the needs of our com­mu­ni­ties and putting mon­ey back in the pock­ets of low-income fam­i­lies via a sales tax rebate, these poli­cies are the first steps on the path to bal­anc­ing our tax code. We’ll con­tin­ue down that path of tax reform with the ongo­ing work of the Tax Struc­ture Work Group.”

ESSB 5096 was NPI’s top pri­or­i­ty for the 2021 leg­isla­tive ses­sion. It was also the top leg­isla­tive pri­or­i­ty for the Bal­ance Our Tax Code coali­tion and the Wash­ing­ton State Demo­c­ra­t­ic Par­ty. Since the bill includes a pro­vi­sion stat­ing it is nec­es­sary for the sup­port of state gov­ern­ment, it is not sub­ject to referendum.

Dis­graced ini­tia­tive pro­mot­er Tim Eyman (who owes Wash­ing­ton tax­pay­ers mil­lions of dol­lars for repeat­ed and will­ful vio­la­tions of the FCPA) sought to test whether the Sec­re­tary of State would per­mit ref­er­en­dum fil­ings on the bill last week. He got his answer when elec­tions offi­cials denied his filings.

Pri­or to ESSB 5096’s final adop­tion, Eyman had been attempt­ing to con­vince poten­tial fun­ders and sup­port­ers to sup­port an ini­tia­tive to over­turn the bill, rather than a ref­er­en­dum, char­ac­ter­iz­ing the pre­vi­ous iter­a­tion of the bill (which did not pro­hib­it a ref­er­en­dum) as “a trap” set by Democrats.

Though ESSB 5096 will not be sub­ject­ed to a poten­tial ref­er­en­dum, it will have to over­come legal chal­lenges from sev­er­al right wing groups. Those chal­lenges will begin at the tri­al court lev­el and almost cer­tain­ly wind up in front of the Wash­ing­ton State Supreme Court with­in the next year and a half.

There could also be a bal­lot chal­lenge in the form of an ini­tia­tive, most like­ly in 2022, giv­en that the win­dow to qual­i­fy a mea­sure to the Novem­ber 2021 bal­lot is rapid­ly clos­ing. (The sig­na­ture dead­line is in just two months.)

NPI’s research has found strong pub­lic sup­port for a state cap­i­tal gains tax on the wealthy for six years run­ning. Our most recent find­ing is sum­ma­rized below:

Capital gains tax poll finding (May of 2020)

QUESTION: Do you strong­ly sup­port, some­what sup­port, some­what oppose, or strong­ly oppose tax­ing the cap­i­tal gains of wealthy indi­vid­u­als to help pay for pub­lic schools, col­leges and universities?

ANSWERS:

  • Sup­port: 59% 
    • Strong­ly Sup­port: 42%
    • Some­what Sup­port: 17%
  • Oppose: 32%
    • Some­what Oppose: 11%
    • Strong­ly Oppose: 21%
  • Not Sure: 9%

Note that more respon­dents said they strong­ly sup­port a cap­i­tal gains tax on the wealthy than the total num­ber who said they were opposed.

We also found in that same sur­vey about that an almost iden­ti­cal per­cent­age of vot­ers feel that schools in Wash­ing­ton are still under­fund­ed, despite the Legislature’s work to respond to the Supreme Court’s McCleary deci­sion. The imple­men­ta­tion of ESSB 5096 will help address that fund­ing need.

Our May 2020 sur­vey of 1,070 like­ly 2020 Wash­ing­ton State vot­ers was in the field from Tues­day, May 19th through Wednes­day, May 20th, 2020.

It uti­lizes a blend­ed method­ol­o­gy, with auto­mat­ed phone calls to land­lines and text mes­sage answers from cell phone only respondents.

The poll was con­duct­ed by Pub­lic Pol­i­cy Polling for the North­west Pro­gres­sive Insti­tute, and has a mar­gin of error of +/- 3.0% at the 95% con­fi­dence level.

NPI con­grat­u­lates every­one who par­tic­i­pat­ed in the effort to secure the pas­sage of ESSB 5096, espe­cial­ly the Demo­c­ra­t­ic leg­is­la­tors who spon­sored the bill, presided over its con­sid­er­a­tion in com­mit­tee, and vot­ed for it on the floor.

This is a great day for Wash­ing­ton State and the Pacif­ic Northwest.

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